The Best Way to Cut Down Energy Use

We are often told that cutting down on our use of energy will benefit the environment. But is there a way to reduce consumption without hindering growth or inhibiting lifestyle?

With this question in mind we asked The Experts: What are three things consumers—or businesses—could do to cut energy waste?

This discussion relates to a recent Journal Report on myths about renewable energy and formed the basis of a discussion on The Experts blog on Sept. 25.

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Three Easy Tips to Reduce Your Energy Use

CHRISTINE WHITMAN: First people need to understand that their individual actions contribute to a cumulative impact. Whenever they renovate a home or business, look for the most-energy-efficient products to install. Finally, turn off lights and unplug chargers when they're not in use.

Christine Todd Whitman was governor of New Jersey from 1994 to 2001 and administrator of the Environmental Protection Agency from 2001 to 2003. She is currently president of Whitman Strategy Group, a consulting firm that specializes in helping companies find solutions to environmental challenges.

In his February State of the Union Address, President Obama reframed the opportunity when he set a new goal for America to "…cut in half the energy wasted by our homes and businesses over the next 20 years." This doubling of U.S. energy productivity would generate considerable economic benefit for America.

While there are many actions consumers and business can take to manage their energy consumption and raise U.S. energy productivity, I believe the following are the top three:

1. Participate in your utility provider's energy-efficiency programs. According to the American Council for and Energy Efficiency Economy, 24 states have Energy Efficiency Resource Standards in place reaching more than 240 million Americans. In order to capture and achieve these mandatory savings, utilities offer incentives to consumers through Demand Side Management programs.

2. Understand how much energy you are using relative to other homes and businesses. Energy-efficiency implementers are increasingly turning to the field of behavioral science to unlock new ways to engage consumers around their energy use. Experts in that field find that when energy bills include feedback on how someone's energy consumption compares to their neighbors, that information produces measurable improvements in energy conservation. Research and experience are showing that this information seems to engage the American competitive spirit to motivate consumers to use less energy.

3. Encourage policy makers and your utility company to invest in energy efficiency. Overwhelmingly, local and state policies have created markets for energy efficiency in the U.S. and this trend is likely to continue. Policies such as more stringent energy building codes, decoupling utility sales from revenues and state energy efficiency ratings mandates are key to growing the market for energy efficiency.

The Free Market Is the Best Generator of Energy Efficiency

TODD MYERS: Whenever politicians lecture about wasted energy, I remember the saying that "the man who says it can't be done should get out of the way of the woman who is doing it." Individuals and businesses are already sensitive to energy prices, which is one reason our economy is far more efficient today than ever before.

Kevin Wilhelm, an expert in environmental business, notes that "While everyone wants to rush off and put solar panels on the roof, we recommend they work on energy efficiency first, second, third, fourth, fifth and then look at renewables."

Improvements in energy efficiency occur in small, incremental changes, customized to fit each circumstance. Families who drive a great deal can buy cars that are more fuel efficient. Homeowners in areas with high energy costs can add insulation. The solutions are personal.

For some, concern about wasting energy is really concern about the environmental impact of energy use. This leads to one of my other favorite quotations, from Nobel Prize winner Muhammad Yunus: "When I see a problem, I don't wait for government. I start a business."

Just as few of us can grow our own food or generate our own energy, few of us can effectively reduce our environmental footprint. Businesses in the free market provide opportunities to pay for environmental reduction you cannot achieve yourself.

For example, consumers and businesses can buy renewable energy credits (RECs) which increase the percentage of our energy from carbon-free sources. The cost to buy credits to cover all personal use is about $10 a month for an average household.

That's why the free market produces superior environmental results to politics. It provides a price signal that encourages everyone to effectively reduce waste and provides opportunities to use disposable income for environmental solutions.

Todd Myers (@WAPolicyGreen) is environmental director at the Washington Policy Center in Seattle and author of "Eco-Fads: How the Rise of Trendy Environmentalism is Harming the Environment." He also serves on the Washington state Salmon Recovery Council.

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We All 'Should' Go Green. But That Doesn't Mean We Will.

MARK THURBER: Businesses (at least publicly held ones) will do what they always do: Seek to maximize profits subject to the rules laid down by policy makers and regulators. Where it represents a major cost to them, companies already take steps to cut energy waste. Policy makers could help further the climate-mitigation cause by making sure that companies are fully exposed to the negative externalities of greenhouse gas emissions.

I find the question about what individuals can do to be particularly interesting. Speaking for myself, I am rarely motivated to do something just because I "should"—whether it is exercising or reducing my energy consumption. Assuming that I am not alone in this respect, I suggest that individuals look for "win-wins." What can you do to save energy that also improves your quality of life and/or saves money (which in turn can contribute to quality of life)?

For instance, one might explore commuting by public transit because it avoids traffic stress and because it saves a lot of money that can be spent on something one really enjoys (in my case, sailing on the San Francisco Bay). Or someone with technical leanings might get home solar, an electric car and a home-energy-management system not because it necessarily saves money but simply because it is enjoyable to monitor and take charge of household energy production and consumption. Each person's recipe will be different—hence my reluctance to lay down three "one-size-fits-all" recommendations. But thinking in terms of improving quality of life by reducing energy consumption may yield better results than starting with a guilt trip.

Mark Thurber is associate director at the Program on Energy and Sustainable Development at Stanford University. His research focuses on the role of state-owned enterprises in fossil-fuel production, as well as how to deliver energy to low-income populations.

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Why Energy Efficiency Is About to Take Major Leap Forward

IVÁN MARTÉN: The vast economic and environmental potential for energy efficiency is well understood, including the types and sources of energy waste. Yet, surprisingly, adoption of efficiency measures has lagged behind predictions. The hurdles include inadequate attention to energy costs, conflicting incentives for landlords and tenants, and high costs and administrative hurdles of energy-efficiency projects.

Still, growth is finally looming. An upcoming report by Boston Consulting Group predicts double-digit growth for the energy-efficiency industry until 2020, thanks to a mix of regulatory, financial, and technological factors. For example such cost-effective technologies as solar-powered heat pumps improve the business case for efficiency, while intelligent control systems for decentralized components can improve the economics. Innovative businesses, moreover, are addressing the adoption hurdles and creating new demand. Low interest rates and public funding even make larger projects attractive, provided they sufficiently cut energy costs.

For consumers and businesses, these developments enhance the availability and ease of implementation of measures to cut energy costs. Especially for older buildings, quick fixes like simply sealing leaking windows can pay themselves off in less than a year. Larger investments are required when appliances are replaced. Attractive options are high-efficiency refrigerators, light-emitting-diode lamps that use 80% less electricity than incandescent bulbs, and well-adjusted HVAC systems.

Some changes require outside expertise and capital. Energy service companies offer skilled advice for improving efficiency in individual buildings or across an entire company. They can also install new equipment and secure financing. BCG is observing how players from a number of industries are entering the energy services arena to claim market share.

Businesses can also make a buck while helping their customers save energy. Products with reduced packaging, for instance, lower the customers' logistics costs, and more water-efficient products require less energy for heating. Enabling energy efficiency has become a competitive differentiator that can help a company become a supplier of choice.

Iván Martén is a senior partner at Boston Consulting Group. He has been the global leader of BCG's energy practice since 2008 and previously was the European leader of the practice.

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What Works—and What Doesn't—When Trying to Cut Energy Waste

JEFFREY BALL: The most important thing a consumer or a business can do to cut energy waste is to start with some rational analysis and math. More specifically:

One mistake people make in trying to cut energy waste is that they focus on changing things that, in the broad context of the way they use energy, don't much matter. So, before spending a lot of money on new energy-efficient equipment, it makes sense to get an energy audit. Such an assessment, done well, will yield a comprehensive picture of how the consumer or business owner uses energy. By pointing up the biggest sources of energy waste, it will suggest where to start cutting first.

Another thing people can do is to take a longer view in fixing the problem. U.S. homeowners tend to reject investing in energy-efficiency projects that will take more than two or three years to pay for themselves through lower energy bills. (Business owners tend to accept longer payback times, because they're accustomed both to longer planning horizons and to factoring energy costs into their business plans.) A number of new private financing options and government incentives are helping defray the capital cost of energy-efficiency improvements. If you're likely to be in your home or office for, say, eight years, then it makes financial sense to invest in an energy-efficiency project that take as long as seven years to pay back.

A third thing people can do is to focus on the boring stuff before the sexy stuff. Study after study has concluded it's cheaper to cut fossil-fuel waste in a building by adding insulation to the walls than by putting solar panels on the roof. Similarly, to cut energy waste on the road, it's often more effective to change the way you drive whatever you're driving—not slamming the pedal to the metal when the traffic light turns green, for instance—than it is to go out and buy a more-fuel-efficient car or truck. The lowest-tech steps often produce the biggest bang for the buck.

Jeffrey Ball (@jeff_ball), formerly The Wall Street Journal's environment editor and a longtime energy reporter at the paper, is scholar-in-residence at Stanford University's Steyer-Taylor Center for Energy Policy and Finance, a joint initiative of Stanford's law and business schools. He writes about energy and heads a project exploring the relationships among countries in the globalizing clean-energy industry.

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